International

Climate change is a global challenge and requires a global solution. Through analysis and dialogue, the Center for Climate and Energy Solutions is working with governments and stakeholders to identify practical and effective options for the post-2012 international climate framework. Read more

Before the International Economic Policy, Export andTrade Promotion Subcommittee, The Foreign Relations CommitteeUnited States Senate

Washington, DCMay 19, 2005

Mr. Chairman and members of the subcommittee, thank you for the opportunity to testify on the Climate Change Technology Deployment in Developing Countries Act of 2005 (S.883) introduced by the chairman. My name is Eileen Claussen, and I am the President of the Pew Center on Global Climate Change.

The Pew Center on Global Climate Change is a non-profit, non-partisan and independent organization dedicated to providing credible information, straight answers and innovative solutions in the effort to address global climate change. Thirty-nine major companies in the Pew Center’s Business Environmental Leadership Council (BELC), most included in the Fortune 500, work with the Center to educate the public on the risks, challenges and solutions to climate change.

Global climate change is real and likely caused mostly by human activities. While uncertainties remain, they cannot be used as an excuse for inaction. Temperatures at the Earth’s surface increased by an estimated 1oF over the 20th century. The 1990s were the hottest decade of the entire century; perhaps even the millennium, and 1998, 2001, and 2002 were three of the hottest years ever recorded. The growing scientific consensus is that this warming is largely the result of emissions of carbon dioxide and other greenhouse gases from human activities including industrial processes, fossil fuel combustion, and changes in land use, such as deforestation. Projections of future warming suggest a global increase of 2.5oF to 10.4oF by 2100, with warming in the United States expected to be even higher. This warming, along with the associated changes in precipitation and sea-level rise, will have important consequences for the U.S. environment, economy and security.

I believe there are three things we in the United States must do to reduce the real and growing risks posed by global climate change: First, we must enact and implement a comprehensive national program to progressively and significantly reduce U.S. emissions of greenhouse gas emissions in a manner that contributes to sustained economic growth. While I am happy to elaborate on this point, that is not my intent today. Second, we must strengthen our efforts to develop and deploy climate-friendly technologies and to diffuse those technologies on a global scale. That is the primary thrust of the bill before you today. And third, the United States must work with other countries to establish an international framework that engages all the major greenhouse gas-emitting nations in a fair and effective long-term effort to protect our global climate. I would like to return to this point later in my testimony and offer specific ideas on how this third critical challenge can best be met. First, though, let me discuss the specifics of the Hagel bill.

We must strengthen efforts to develop and deploy climate-friendly technologies on a global scale. Standards of living are expected to rise in developing countries over the next few decades, and, as they do, energy demand will rise. China, for example, expects to build 544 gigawatts of new coal capacity between 2003 and 2030, far more than current coal capacity in the United States. Shanghai predicts a quadrupling of cars and trucks by 2020, and car sales in Delhi have risen 10% per year since the mid-1970s. If we are going to address the climate change problem, the huge growth in energy demand in developing countries has to be as climate-friendly as possible.

Sen. Hagel’s bill is intended to address exactly that challenge. The bill would have the Department of State identify the top 25 energy users among developing countries, describing among other things the quantities and types of energy they use, and the greenhouse gas intensity of their energy, manufacturing, agricultural and transportation sectors. The bill would require the development of a technology strategic plan, and provide for at least ten demonstration projects to promote the adoption of technologies and practices that reduce greenhouse gas intensity in developing countries. The bill would identify potential barriers to the export and adoption of climate-friendly technologies. All of these would be useful activities.

I would, of course, like to offer a few suggestions.

First, we should tailor the assistance provided to developing countries to their needs. It is in the interest of the United States for developing countries to develop, and thereby to increase the health and well-being of their people, and it is important to recognize that the path each country takes in its development will vary. Our efforts to promote the deployment of climate-friendly technologies will occur in the context of these varying paths to development. Rather than viewing climate-friendly technology deployment as an exercise in funding demonstration projects or increasing technology exports, our objective should be to integrate climate-friendly activities into national strategies for economic growth, poverty reduction, and sustainable development. We should be helping developing countries build their capacity to assess clean energy options and establish policy frameworks that will favor such options even after our funding assistance is gone.

The reality is that the highest priority for most developing countries is economic growth and development. Energy policies and plans are critical to achieving those priorities. Making climate change one of the drivers of energy policy, as the United Kingdom has done, will move us toward meeting our goal of a stable climate. It is in this context that we should support and promote efforts by the largest developing countries to identify specific goals for limiting their emissions of greenhouse gases – recognizing that their goals may vary in form, content and timing. One way to do that would be to require that the largest developing countries, in agreeing to receive assistance under this bill, would establish goals consistent with their development strategies, and periodically report progress towards meeting them.

Second, we would recommend tracking progress under this bill not only in terms of greenhouse gas intensity, but in terms of actual greenhouse gas emissions. Measuring intensity is useful in that it allows us to distinguish a reduction in emissions that results from a genuine improvement in the technology from a reduction due to reduced production. Intensity reduction, however, is not a surrogate for emission reduction, and our objective of achieving a stable climate must entail actual emission reductions. We therefore should be tracking our progress in those terms.

I would respectfully suggest that Senator Byrd’s International Clean Energy Deployment and Global Energy Markets Investment Act of 2005 (S.745) takes a useful approach to the issues I have just mentioned. It might be beneficial to merge these aspects of the Byrd bill with the Hagel bill.

An international technology deployment program, such as the Hagel bill, can only be effective in the context of an international framework that engages all major emitting countries in the effort against climate change. So even more critical, I believe, is the third challenge I identified at the outset: establishing a fair and effective international framework to engage all major emitting countries in the effort against climate change.

Through an initiative called the Climate Dialogue at Pocantico, the Pew Center has engaged with policymakers and stakeholders from around the world in a wide-ranging examination of specific options for advancing the international climate effort. I would like to share with you some of the insights and observations emerging from this ongoing dialogue.

First, there is no getting around national interest. Climate change is a collective challenge. However, the political reality is that nations will join in meeting this collective challenge only if they perceive it to be in their national interests. A multilateral framework must therefore recognize and accommodate the very real and significant differences among nations. The key here is flexibility. We need a framework flexible enough to allow different countries to undertake the different types of strategies best suited to their national circumstances. To accommodate different types of strategies, we must allow for different types of commitments. For instance, a quantified emissions limit may be appropriate for some countries, while for others some form of non-quantified policy commitment may be more feasible and effective. Also, commitments could apply economy-wide, or they could be structured around specific sectors.

There are many possibilities and the time to begin considering them is right now. In its present form, the Kyoto Protocol extends only to 2012. Under the terms of the Protocol, parties must begin consideration of new commitments this year. This process will begin when climate negotiators meet later this year in Montreal. While the United States is not a party to the Protocol, it can, if it so chooses, exert great influence on the pace and direction of these discussions. Other countries would very much welcome the United States’ engagement. Most have come to accept that the United States will never be a party to the Kyoto Protocol. And they understand that a truly effective international approach – one with the full engagement of the United States and the major developing countries – will require moving beyond Kyoto. The Administration has thus far taken the position that it is premature to discuss post-2012 options. Quite to the contrary, it is essential that we begin now, with the United States fully and constructively engaged.

Toward that end, I believe the most powerful step the Senate could take to reestablish U.S. leadership on this vital global issue would be to revisit and update the sense of the Senate on the future of the international climate effort. As we all know, Senate Resolution 98 of the One Hundred Fifth Congress – the Byrd-Hagel resolution – has had a profound influence on the climate debate here and abroad. As the international climate effort enters a new stage, a new Senate resolution can again shape the debate. It can help ensure that the United States is at the table and define the terms of U.S. engagement; and, in so doing, it can help achieve the best possible outcome.

I would strongly encourage the Foreign Relations Committee to consider, and to report to the full Senate, a resolution advising the Executive Branch to work with other nations, both under the Framework Convention and in other international fora, with the aim of securing U.S. participation in agreements consistent with the following four objectives:

First, to advance and protect the economic and national security interests of the United States. Potential climate change impacts such as chronic drought, famine, mass migration, and abrupt climatic shifts may trigger regional instabilities and pose a growing threat to our national security interests. Addressing climate change, on the other hand, can greatly strengthen U.S. security by reducing our reliance on energy imports. Sea-level rise and other climate impacts pose a direct economic threat as well, to U.S. communities and to U.S. businesses. On the other hand, our response to climate change, if not well conceived, could pose a different sort of economic burden. It is imperative that we both avoid the economic consequences of climate change, and minimize the costs of addressing climate change.

Second, to establish mitigation commitments by all countries that are major emitters of greenhouse gases. Ideally, a global challenge such as climate change should be met with a full global response. What is most critical at this stage, however, is getting the largest emitters on board. Twenty-five countries account for 83 percent of global greenhouse gas emissions. Seventeen of them are also among the world’s most populous countries, and twenty-two are among those with the highest GDPs. To be truly effective, these major emitters must be part of the solution. While we cannot expect all these countries to act in the same way, or necessarily in the same timeframe, we believe that all must commit to take action.

Third, to establish flexible international mechanisms to minimize the cost of efforts by participating countries. The United States has led the world in demonstrating that well-designed market-based approaches can achieve the greatest environmental benefit at the lowest cost. U.S. negotiators fought rightly and successfully to build market mechanisms into the Kyoto architecture. U.S. economic and business interests will be best served by an international climate strategy that uses emissions trading and other mechanisms to ensure that our efforts are as cost-effective as possible.

And, fourth, to achieve a significant long-term reduction in global greenhouse gas emissions. Our initial efforts to address climate change, both domestically and internationally, can be at best first steps. But in taking these steps, we must remain cognizant of our ultimate objective – stabilizing the global climate – and we should craft policies and agreements robust enough to drive and sustain the long-term efforts needed to achieve it.

I believe these four principles form a solid foundation for constructive U.S. engagement and urge that they be incorporated in a new Sense of the Senate resolution. Moreover, such a resolution strikes me as being very much within the spirit of the Hagel bill and could well be taken up as an amendment to it.

In closing, the most important thing Sen. Hagel has done in writing S.883, and that the subcommittee has done in holding this hearing, is to join the question of how best to address climate change. As Senator Hagel has said, “Achieving reductions in greenhouse gas emissions is one of the important challenges of our time.” And: “We all agree on the need for a clean environment and stable climate. The debate is about solutions. The question we face is not whether we should take action, but what kind of action we should take.” I thank and commend Sen. Hagel for placing these issues before you, and thank the subcommittee for the opportunity to testify. The Pew Center looks forward to working with the committee and Sen. Hagel on S.883 and on any future climate change legislation.

Washington, DC – The Pew Center on Global Climate Change today announced that it will convene the Australia-New Zealand Climate Forum, a gathering of policymakers, stakeholders, and experts to explore options for advancing the international climate change effort beyond 2012. The event, to be held April 8 in Sydney, is being organized in cooperation with the Australia and New Zealand governments.

The forum is part of a broader initiative by the Pew Center, an independent U.S.-based think tank, to promote constructive thinking and dialogue on next steps in the international climate effort. Over the past year, the Center’s Climate Dialogue at Pocantico has brought together senior policymakers and stakeholders from 15 countries to discuss post-2012 options. The Sydney forum provides an opportunity for the region’s leading climate figures to learn about and contribute to this ongoing dialogue.

Speakers at the forum will include Ian Campbell, Minister for the Environment and Heritage in Australia, and Pete Hodgson, Minister of Transport and Convenor of the Ministerial Group on Climate Change in New Zealand.

“There is a critical debate emerging over the future of the international climate effort. Our aim in Sydney will be to help ensure that the region’s key players are fully informed and engaged as this debate moves forward,” said Pew Center President Eileen Claussen, former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.

“It is clear to all involved that the Kyoto Protocol is at best a start in the international climate effort. We think it’s important to look beyond Kyoto. We need new approaches that will engage all the large greenhouse gas emitters in a serious long-term effort that protects both the global climate and the global economy. That will be the focus of our discussions in Sydney, and we are grateful to the governments of Australia and New Zealand, and in particular to Minister Campbell and Minister Hodgson, for hosting this timely discussion,” Claussen said.

The day-long forum will have two segments – a Leaders Roundtable in the morning with Ministers, CEOs, and other senior officials and executives; and a larger gathering in the afternoon with a broader group of policymakers, stakeholders, and experts. Participation in both segments is by invitation only. A briefing for interested press will be held the day before the forum (see note below).

Each session will feature presentation of analysis and post-2012 options developed in connection with the Pocantico dialogue. The afternoon session also will include responses from experts and stakeholders in the region, including: Catherine Beard of the Greenhouse Policy Coalition; Gregg Bourne of the World Wildlife Fund; Mitchell Hooke of the Minerals Council of Australia; Heather Ridout of the Australian Industry Group, and Ralph Sims of Massey University.

The Pew Center, based in Arlington, Virginia, was founded in 1998 by the Pew Charitable Trusts, a U.S. philanthropy, to promote pragmatic and effective U.S. and international climate change policies. The Center publishes peer-reviewed analysis of climate science, economics, policy, and solutions; consults on policy development with the 38 major corporations in its Business Environmental Leadership Council; and facilitates dialogue among experts, policymakers, and stakeholders. It is funded entirely by charitable donors. (For more on the Center, see www.c2es.org)

The Center’s Climate Dialogue at Pocantico began in July 2004 and will conclude later this year. Its 25 participants include policymakers from Argentina, Australia, Brazil, Canada, China, Germany, Japan, Mexico, the United Kingdom, and the United States; NGO representatives from India, Switzerland, and the United States; and senior executives from Alcoa, BP, DuPont, Eskom, Exelon, Rio Tinto, and Toyota. The participants include Howard Bamsey, Chief Executive of the Australian Greenhouse Office, and Meg McDonald, General Manager, Corporate Affairs, for Aloca World Alumina in Australia. Additional background, including the full list of participants and options under consideration, is available at www.c2es.org/pocantico.cfm.

The Pocantico dialogue is supported by The Pew Charitable Trusts, the United Nations Foundation, the Wallace Global Fund, and the Rockefeller Brothers Fund. The Australia-New Zealand Climate Forum is supported by the Australia and New Zealand governments through the Australia-New Zealand Climate Change Partnership.

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NOTE TO EDITORS AND REPORTERS:Eileen Claussen and other participants in the Pocantico dialogue will brief interested press on Thursday, April 7 (time and location to be determined), on analysis and options to be presented at the forum. Those interested in participating in the briefing should contact Katie Mandes (+1 703 516 0606;mandesk@c2es.org). Both the morning and afternoon segments of the April 8 forum will be closed to press.

The European Union Emissions Trading System (EU-ETS) is a landmark environmental policy, representing the world’s first large-scale greenhouse gas (GHG) trading program, covering around 12,000 installations in 25 countries and 6 major industrial sectors. The EU-ETS offers an opportunity for critical insights into the design and implementation of a market-based environmental program of such size and complexity. In addition, key lessons based on actual experiences of emissions trading will include the cost of emissions reductions, the implications on competitiveness of sectors and firms, and the development of new technologies and efficiency opportunities.

This analysis discusses the background to the EU-ETS in the context of ongoing emission abatement efforts and policy initiatives to meet EU-25 member state targets under the Kyoto Protocol. The key elements of the EU-ETS are detailed, focusing on its timetable, sectoral coverage, methodology for distributing emission allowances, provisions for banking, opt-outs, opt-ins and pooling mechanisms, the procedures for monitoring and verification, and the compliance mechanisms.

The paper then turns to the current status of the EU-ETS, focusing on the ongoing national allocation plans, and discussing key remaining uncertainties, namely the readiness of all parties to trade, linkages to other trading programs, availability and use of project-based allowances, the impact of Russian emission credits, strategies of new Central and Eastern European member states, the compliance role of governments, progress in emissions reductions from sectors outside the EU-ETS, and finally the importance of expectations of future targets and prices.

This paper concludes with early conclusions from this first large-scale GHG emissions trading program. The EU-ETS is up and running with significant trading volumes; it looks set to deliver real (vs. BAU) but modest reductions; these reductions are focused on the power sector; and ongoing concerns remain regarding detrimental impacts on industry competitiveness and the impact of higher electricity prices. Key remaining challenges include the remaining implementation issues of this novel trading system, and to retain political support for the EU-ETS in the years ahead. Key insights from the EU-ETS will include the price, traded volume and cost-savings from GHG trading, the longer term implications of the EU-ETS for technology development and the progression of global climate change policies, and direct lessons for U.S. policy makers as they debate domestic GHG trading proposals.

The Protocol enters into force when ratified by at least 55 countries accounting for at least 55 percent of developed country emissions in 1990. The first threshold was met in 2001 (128 countries have now ratified the Protocol). With Russian ratification, the second threshold was met. The Protocol enters into force, or takes effect, 90 days after the Russian government deposits its instrument of ratification with the United Nations. That happened on Feb 16, 2005. With entry into force, Kyoto’s emission targets become binding legal commitments for those industrialized countries that have ratified it (the United States and Australia have not). Also, the market-based mechanisms established under Kyoto, including international emissions trading and the Clean Development Mechanism, became fully operational.

Without the United States on board, how much impact will Kyoto have?

Kyoto sets emission targets for industrialized countries for the years 2008-2012, with the expectation of more stringent targets in the future. Kyoto’s initial targets aim to reduce industrialized country emissions about 5 percent below 1990 levels. Industrialized countries account for roughly half of global greenhouse gas emissions. Without the United States (the world’s largest emitter) and Australia, Kyoto’s limits apply to countries accounting for 32 percent of global emissions. Most experts and governments believe that much steeper emission reductions, 60 percent or greater, will ultimately be needed to avert serious climate change impacts.

Do countries plan to negotiate further emission reductions?

Kyoto requires that parties to the Protocol begin negotiating in 2005 toward a second round of commitments. It is unlikely that the industrialized countries that have ratified Kyoto will agree to more stringent targets post-2012 unless there is also stronger action by the United States and by major developing countries. One possibility is that the new round of talks will focus more broadly on ways to modify Kyoto or structure a successor agreement acceptable to all the major emitting countries.

What does this mean for U.S. business, particularly those corporations that have operations in Kyoto countries?

It is not clear what the effects of Kyoto ratification will be on U.S. businesses. International businesses operating in Europe, Canada, and Japan are already beginning to grapple with Kyoto policy environments. Many U.S. companies already believe that the United States will eventually regulate greenhouse gas emissions, and are taking actions to reduce their own emissions, to develop technologies that would help others reduce their emissions, and to help shape future U.S. climate policy. These activities are likely to continue, and perhaps accelerate, in light of Kyoto ratification.

What is the current Administration's climate change strategy and will it reduce the nation's greenhouse gas emissions?

On February 14, 2002, President Bush announced a new climate change strategy for the United States that sets a voluntary "greenhouse gas intensity" target for the nation, expands existing programs encouraging companies to voluntarily report and reduce their greenhouse gas emissions, and proposes increased federal funding for climate change science and technology development. Some elements of the Administration's strategy may provide additional incentive to companies to voluntarily reduce greenhouse gas emissions. However, the Administration's target - an 18 percent reduction in emissions intensity between now and 2012 - will allow actual emissions to increase 12 percent over the same period. Emissions will continue to grow at nearly the same rate as at present. What are the key elements of a prospective U.S. climate change program?

A number of policy options are available to secure emissions reductions, but to be effective and affordable, a long-term emissions reduction program must couple mandatory GHG reductions with technology development and market mechanisms. A comprehensive domestic strategy would couple short- and long-term measures that aim to (1) improve the tracking and reporting of GHG emissions; (2) promote new technologies and practices; and (3) provide a foundation upon which to secure both short-term and long-term emissions reductions. While each of these objectives can be pursued in a number of different ways, an effective strategy must address all three.

What actions has Congress taken to address climate change in the United States?

As the scientific evidence of climate change has mounted, so has congressional activity. The number of climate change-related legislative proposals increased from seven introduced in the 105th Congress (1997-1998) to 25 in the 106th Congress (1999-2000) to over 80 in the 107th Congress (2001-2002) to nearly 100 in the 108th Congress (2003-2004). Legislation to have the largest emitters of greenhouse gases (GHGs) disclose their emissions has passed the Senate twice. And in October 2003, the bipartisan team of Senators Joseph I. Lieberman (D-CT) and John McCain (R-AZ) won the support of 44 Senators in the first vote on their bill to cap U.S. greenhouse gas emissions.

The growing activity suggests that a bipartisan consensus is developing around certain legislative proposals, including measures to require the disclosure of GHG emissions, protect companies reducing GHG emissions from being penalized under a future GHG reduction program, and promote carbon sequestration. Addressing the challenge of climate change will ultimately require a more comprehensive set of approaches, however, including a mandatory program to reduce GHG emissions (such as the Lieberman-McCain bill), and efficiency standards to promote the use of efficient products and technologies. Enactment of such policy will no doubt be a longer-term proposition.

Are voluntary GHG reduction programs sufficient to control U.S. GHG emissions, or is a mandatory program necessary?

In response to the goal of the U.N. Framework Convention on Climate Change to stabilize GHG concentrations at a level that would prevent dangerous human interference with the climate system, the United States has instituted a number of programs since 1992. These include voluntary GHG mitigation programs, research and development, and a subset of energy policies that focus on energy efficiency and renewable energy. More than a decade of experience with these programs shows that while they have at times inspired significant action on the part of individual companies, these measures have not succeeded in reducing, or even stabilizing, total U.S. emissions. U.S. greenhouse gas emissions increased roughly 12 percent between 1990 and 2001, and are projected to increase another 12 percent by 2012. Voluntary programs can provide important experience for designing future efforts, but they cannot stimulate the broad engagement that will be necessary to achieve the level of emissions reductions that ultimately will be required. In order for the United States to achieve the significant GHG reductions necessary to address climate change, it must implement a mandatory GHG reduction program.

Why is it important for businesses to have a global climate change regime in place sooner than later?

In the absence of a global climate change regime, most companies will forge ahead with existing programs to reduce their emissions, encourage greater energy efficiency, begin a switch to less carbon intensive fuels, and continue to develop alternative energy technologies.

Now that Kyoto has entered into force, attention must turn to strengthening the international framework for the years following Kyoto’s initial commitment period (2008-2012). The overriding challenge is to forge an agreement that includes all the major emitting countries – both developed and developing – and begins significant long-term reductions in global emissions. Among the core issues to be addressed are the nature of future climate commitments and whether they must be guided by a more specific long-term target. Other central issues are equity, cost, the interaction between climate efforts and international trade, and how best to integrate climate concerns with the development needs of developing countries.

With a team of authors from developed and developing countries, we produced a series of “think pieces” examining these core issues in 2003. The draft papers were presented for discussion at workshops in China, Germany, and Mexico. The process engaged more than 100 experts, policymakers, and stakeholders from nearly three dozen countries. The final report, Beyond Kyoto: Advancing the International Effort Against Climate Change, was released at COP 9 in Milan, where it served as the foundation for a high-level forum with ministers and business and NGO leaders.

This initiative continued with the Climate Dialogue at Pocantico, a series of off-line discussions among 25 senior policymakers and stakeholders from 15 countries exploring options for next steps in the international climate effort. The dialogue provided an off-line opportunity for participants to consider specific options with the objective of identifying a set of options to be recommended for consideration by the broader policy community.

The international response to climate change was launched in 1992, at the Earth Summit in Rio de Janeiro, with the signing of the U.N. Framework Convention on Climate Change. The Convention established a long-term objective of stabilizing greenhouse concentrations in the atmosphere “at a level that would prevent dangerous anthropogenic interference with the climate system.” It also set a voluntary goal of reducing emissions from developed counties to 1990 levels by 2000 – a goal that most did not meet.

Recognizing that stronger action was needed, countries negotiated the 1997 Kyoto Protocol, which sets binding targets to reduce emissions 5.2 percent below 1990 levels by 2012. Although the United States has not signed on to Kyoto, more than 100 other nations have ratified it and many of the developed countries have begun efforts to meet their emissions targets. The Protocol legally entered into force on February 16, 2005.

The Kyoto Protocol, an international agreement adopted in December 1997 in Japan, entered into force on February 16, 2005. The Protocol sets binding targets for developed countries to reduce greenhouse gas emissions on average 5.2 percent below 1990 levels, in order to address global warming.

DONALD BREN SCHOOL OF ENVIRONMENTAL SCIENCEAND MANAGEMENT- UNIVERSITY OF CALIFORNIA, SANTA BARBARA

JANUARY 14, 2005

Thank you. I am delighted to be here – and I have to say it was awfully nice of the weather to clear up for my arrival.

Of course, I am not here to talk about the weather. I am here to talk about the climate. And the difference, as we all know, is that climate is what you expect. Weather is what you get. And California has certainly gotten more than it expected or deserved these last few weeks.

I am sure some of you saw the movie, The Day After Tomorrow, and it is hard not to think about it given the recent weather you’ve been having. This is the film that dramatized the effects of climate change by releasing tornadoes in downtown Los Angeles and flooding all of Manhattan. People called it left-wing propaganda, but I remember watching the movie and wondering why only Blue states were getting hit.

And then of course we have the new Michael Crichton book that you have probably heard about. The book, which is climbing the bestseller lists as we speak, tells a fictional tale of how climate change itself is a fiction created by overzealous environmentalists so that they can enact draconian regulations on big business.

The book is called “State of Fear,” and my only fear is that people will take seriously its absolutely wrongheaded portrayal of the problem of climate change.

I hope all of you will join me in reminding people that Mr. Crichton’s specialty is fiction – even if he does include all sorts of graphs and charts in the current book to make it seem like a scientific tract. This is the man who wrote such fantastical books as Jurassic Park, and it seems to me he has been hanging out with too many dinosaurs – people who are mired in the past and who simply cannot and will not accept the broad scientific consensus that we have a significant problem on our hands, and that there are practical and economically sound ways to tackle it.

The point is– whether we are talking about the movie or the book: They are both fiction.

In contrast to the book’s sensationalistic tone and style, your school’s emphasis on rigorous, interdisciplinary approaches to environmental problem-solving is something that is desperately needed in today’s world. With so many complex and urgent environmental issues on the agenda at the local, national and international levels, your work here is essential. And I applaud your interest in these issues and your commitment to solutions.

At the Pew Center on Global Climate Change, we are committed to solutions, too. And today, I would like to talk for a little bit about some of the potential solutions to the problem of climate change. More specifically, I want to talk about the nexus of technology and public policy – in other words, what policies do we need in order to unleash the global technological revolution that is necessary to protect the climate?

I understand there is a hit movie in theaters right now that was filmed in the wine country around here. The movie is called Sideways – and, unfortunately, this is a title that could just as easily apply to current U.S. policy on climate change. But in saying we are moving sideways, even that may be giving us too much credit. Perhaps Backwards would be more appropriate.

Clearly, we can do better. And today I want to talk about how. More specifically, I want to talk about a plan that the Pew Center is developing for U.S. action on the climate issue. We call it our Agenda – and it is something we have been working on in concert with business and government leaders and others to lay out a responsible and practical policy course for the United States for the years to come.

But, before I talk about that, I want to talk briefly about what is at stake here. And I want to paint a clearer picture of the problem we are trying to solve, the problem we must solve—that is, of course, global climate change.

Just last month, the World Meteorological Organization reported that 2004 was the fourth hottest year on record – and that the last four years were among the top five. Of even greater concern was the news we learned in November about the arctic region. This is the canary in the coal mine of climate change, the place where researchers have always said that the effects of this global problem will hit early and hard.

And in November, we learned just how hard. The report of the Arctic Climate Impact Assessment showed that the Arctic region is indeed undergoing dramatic and alarming changes. The reason: It’s warming much more rapidly than previously known, at nearly twice the rate of the rest of the globe.

And it’s important to remember that this isn’t a random, out-of-left-field report. It is the result of an unprecedented, four-year scientific study of the region conducted by an international team of 300 scientists. And its conclusions should be a wake-up call for all nations.

According to the report, at least half the summer sea ice in the Arctic is projected to melt by the end of this century, along with a significant portion of the Greenland Ice Sheet. The Arctic region is projected to warm by an additional 7 to 13 degrees Fahrenheit by 2100. These changes will have major global impacts, contributing to sea-level rise and even intensifying global warming as the disappearance of Arctic ice masses means that more incoming solar radiation will be absorbed at the Earth’s surface instead of being reflected back.

This is scary stuff. And, the fact is, we don’t have to travel to the Arctic to see that climate change is already being observed, even if the impacts in that region may be more pronounced and are occurring at a faster rate. Also in November, the Pew Center released a report showing some of the closer-to-home effects of climate change – effects right here in the United States. Right now.

For example, we are seeing a long-term trend toward an earlier spring, with earlier flowering and reproduction of plant and bird species. Butterflies here on the U.S. west coast are moving north and to higher altitudes in search of tolerable climate conditions, with some populations disappearing altogether from the southern end of their ranges. And this is only the beginning. In addition to their potential to lead to future declines in the diversity of U.S. wildlife, these ecological changes are indicators that global warming is already upon us and that adverse effects to other systems, and ultimately our economy, are just around the corner.

With warming for the next century projected to be two to ten times greater than the last, we’re heading toward a fundamental and potentially irreversible disruption of our ecology and natural systems, both in this country and around the world.

So what can we do? Well, at this point, we have to accept that some climate change already is built into the system – indeed, it is already happening, as I have said. But we do have the power to limit the scope and severity of climate change. And what we need to do is stabilize greenhouse gases in our atmosphere at a level that will keep this problem from becoming a global crisis.

According to the Intergovernmental Panel on Climate Change, stabilization means shooting for the magic number of 550 parts per million – that would be roughly double the pre-industrial level of atmospheric greenhouse gases.

But to get to that level, we need to reduce global CO2 emissions by 55 to 85 percent below what is currently projected under a “business-as-usual” scenario. Fifty-five to 85 percent. Making this challenge even more daunting, energy demand around the world is growing at a breakneck pace. We need to act now to come up with ways to keep global economies growing while curbing the growth in greenhouse gas emissions around the world. And make no mistake: The United States, which is responsible for one-fourth of global emissions, needs to take the lead.

Over the past year, as I have said, the Pew Center has been working to develop a comprehensive plan for U.S. action on this issue. This Agenda is our attempt to develop and articulate a responsible course for addressing climate change.

It is built on six years of Pew Center analysis and experience with leading businesses, and through dialogue with international leaders and experts. And what we recommend in the Agenda is that the U.S. develop an Integrated National Climate Change Strategy. That means a strategy that combines technology development with wide-ranging policies on issues from mitigation and science to adaptation.

This last point, about adaptation, is a crucial part of what we have to do, because even if we push forward with an ambitious strategy to reduce greenhouse gas emissions, we’re already locked in to future changes in the global climate. There is no way around it. And these future changes will pose many challenges to ecosystems and natural resources, as well as human health and national economies. We need to plan now for these changes so that our society and others are able to adapt.

But adapting, of course, is not enough. We also need to take serious action to limit the extent of climate change by reducing our emissions. More than anything else, that will require a global technology revolution – and we need policies to make that revolution happen.

While it’s true that technology normally advances over time on its own, it does not always advance in the right direction. Also, we plainly do not have time to wait. The challenge before us requires a much more deliberate, enunciated effort to develop policies that will help push and pull climate-friendly technologies to the market. We need a guiding vision on the order of putting a person on the moon or developing a cure for cancer. And we need to look at the full range of policy approaches that will get us where we need to be – from market incentives and public-private partnerships to a range of R&D efforts focusing on everything from basic research to deployment.

Perhaps the best way to look at the technology and policy challenge we face is on a sector-by-sector basis. From manufacturing and electricity to buildings, agriculture, forestry and transportation, all sectors of the economy have important parts to play in reducing greenhouse gas emissions. Let me talk briefly about just two: transportation and electricity.

The transportation sector is responsible for more than a third of our greenhouse gas emissions, and a quarter of U.S. energy consumption. To reduce these emissions, the Pew Center's Agenda identifies a range of specific policies-all aimed at speeding the development and deployment of new technologies. And what we need to do is focus on both short-term technologies such as hybrid gas-electric vehicles, as well as longer-term technologies such as hydrogen.

Looking first at the short term, we can do a lot more on the issue of hybrids. This is, in fact, a classic case of how smart policy can make a difference. Yes, hybrid vehicles are selling. But, despite their popularity, there is no way they will represent more than a small fraction of U.S. vehicle sales without government stepping in and creating a bigger market. What can government do? Well, we can do a lot more to step up consumer incentives for buying these low greenhouse gas emitting vehicles - and it is not just hybrids I am talking about but clean-diesel vehicles as well.

We can also remove incentives in the law for purchasing inefficient vehicles such as SUVs - it is frankly hard to believe these incentives exist, given the energy and climate challenges we face. And, last but not least, government can and should take steps to boost public-sector procurement of climate-friendly vehicles. The goal is to create and expand the market - and government can help do that with its own purchases.

Among the longer-term transportation technologies we need to be looking at are hydrogen, biofuels, and all-electric cars and trucks. But every one of these technologies faces substantial barriers that the private sector is unlikely to be able to resolve on its own. We need to ramp up funding for research, design and deployment. Just as important, we need demonstration programs. Everybody talks about a hydrogen economy, but you need a hydrogen infrastructure to make it work. And the government needs to work with industry to come up with demonstrations that will show what's feasible and practical - and how to do it right. For example, it is absolutely essential that we find environmentally friendly ways of producing hydrogen - because if we merely use fossil fuels to do it, the climate problem does not improve; it actually gets worse.

I have talked a lot about cars, but we need to look at other forms of transportation, too. Air, rail, marine transportation, road freight - all of these are a part of the problem, and all of them must be a part of the solution. In the Pew Center Agenda, we talk about the need for government to work with the International Civil Aviation Organization to adopt policies aimed at boosting the fuel efficiency of aircraft. The bottom line is that there are countless ways to reduce emissions from this vital and growing sector. Our challenge is to adopt policies that will ensure that those reductions happen sooner rather than later - when the damage may already be done.

People in California know what needs to happen. Your state is on the verge of establishing tough but achievable standards for greenhouse gas emissions from cars. You would be the first state to do this – and, if it happens, you’ll be charting a productive path forward for the rest of the country. Because the fact is we need national standards like those proposed for California. And, in the Pew Center Agenda, we recommend converting the United States' current fuel economy standards to a set of tradable standards based on greenhouse gas emissions. If you are looking to protect the climate, focusing on emissions is the way to go.

Another sector where we can and must achieve significant progress is electricity, which is responsible for almost 40 percent of U.S. emissions. And here I want to start by talking about coal. In 2003, coal provided 51 percent of U.S. electricity. Worldwide, it is the most abundant and widely distributed fossil fuel. Given current rates of production and use, we have 200 years of reserve supply. Whether you like it or not, coal is going to remain a major part of the energy mix for decades to come.

And so our challenge is twofold: we need to come up with better, cleaner ways to burn coal; and we also need to do everything in our power to figure out how to capture and store the carbon that is produced when we do burn it. There are technologies being developed that hold promise on both of these counts. But, once again, these technologies will go nowhere fast if we don’t light a fire under them, so to speak, with government R&D and other policies. We need tests to find out the practicality of geologic storage of carbon. We need demonstrations so we can understand the ins and outs of CO2 injection underground. We also need to build demonstration plants so we can learn more about coal gasification, which holds the promise of allowing us to burn coal with dramatically reduced carbon emissions.

All of these are smart and necessary investments – not just for climate reasons but also because they can place the United States in a leadership position around the world so we can then export these technologies to other countries with significant coal resources, such as India and China.

So that’s the story with coal. But what about other energy technologies? What about combined heat and power? This is when you capture and use the waste heat generated along with electricity. Want to know the overall efficiency of the U.S. electricity system – what we put in vs. what we get out? It’s 30 to 33 percent of input energy; that level has remained constant since the 1970s. This is inexcusable when you consider that combined heat and power systems can boost efficiency to upwards of 80 percent. Right now, these systems account for just 8 percent of U.S. energy supply, compared to 40 percent in Europe. What policy steps can we take to promote combined heat and power? Well, we can start by regulating utilities based on total energy output. A lot of these are just common-sense solutions.

Another promising energy technology is distributed generation, or DG. This is when you generate electricity close to the point of use. With distributed generation, you can reduce CO2 emissions in a number of ways. In fact, a major benefit of this technology is that you avoid so-called transmission and distribution losses; when electricity is moved over long distances, 7 to 8 percent of it is lost along the way. With distributed generation, you can also use waste heat for combined heat and power in ways that you cannot in a large, centralized power station. So it can be more efficient in that way too. But we need policies to make distributed generation more feasible -- for example, by allowing people to sell excess power back to the grid at a fair price.

Now, what about renewables? If you are talking about climate-friendly sources of energy, you have to talk about renewables – wind, solar, hydropower, geothermal and more. In the past, these technologies have cost significantly more than fossil fuels for the same energy output. But over time we have adopted policies at the national, state and local levels that promote renewables – tax breaks, consumer incentives, portfolio standards that require utilities to generate a set share of their power from these sources. California’s aggressive deployment policies in the 1980s helped bring the cost of wind power down to where it is today – close to the cost of fossil fuel generation in some markets. Yet, the lack of policy leadership in the U.S. meant that we lost our leadership position in the wind field to Europe.

So it is policy that has made these technologies more competitive, but policy needs to do more. We need to do things like extending the wind production tax credit, creating renewable portfolio standards at the state, regional and/or national level, and investing more in research and development. Given the energy security challenges we face in this country, not to mention the climate challenges, developing and deploying renewables should be at the top of our national agenda.

Burning coal in clean ways. Safely storing carbon. Investing in combined heat and power and distributed generation. And making renewables an integral part of our national energy mix. These are critical energy challenges for the future – and they are not the only ones. At the Pew Center, we have always been careful to remain “technologically neutral” – we will throw out the welcome mat for any and all technologies that can be part of the climate solution. And, in our Agenda, we address the need for policies to encourage the development and deployment of everything from advanced nuclear power to new energy-efficiency technologies. This problem is too big for any one solution.

We need to look at an array of technologies, and at an array of policies as well. We need strong R&D policies, government standards and codes, public infrastructure investments, public education programs, public-private partnerships and more. And we also need to look at broader, technology-neutral policies as well – policies that can encourage action across all sectors of the economy. Here I am talking specifically about the policy known as “cap and trade.”

Cap-and-trade is the approach taken in the Climate Stewardship Act introduced last year by Senators Joseph Lieberman and John McCain. Their bill attracted the support of 43 U.S. senators and prompted the first serious debate in Congress about exactly what we need to be doing to respond to the problem of climate change.

The reason cap-and-trade works is that it enables companies to reduce emissions as cheaply as possible. We all know the example of how trading has worked to achieve cost-effective reductions in emissions of the pollutants that cause acid rain. In fact, it was because of the United States’ successful use of trading to reduce sulfur emissions that our country insisted that trading be a central element of the Kyoto Protocol. And now, inspired by Kyoto, the European Union is on the verge of launching the broadest emissions trading system ever established.

What’s more, right here in the United States, nine Northeastern governors, led by New York Governor George Pataki, are developing a multi-state regional “cap-and-trade” initiative aimed at reducing carbon dioxide emissions from power plants. This effort is proceeding well, and we expect them to complete their work by this spring, with agreement on a model rule.

Now, it will probably be some time before we establish a national, economy-wide cap-and-trade system in the United States—the political support for it is not there. But what might be possible is a series of interlinked trading systems – the east coast with Europe and perhaps with Canada and the west coast as well. Such a “bottom-up” system could be robust enough both to achieve some environmental benefit and to keep costs down. And it would be a valuable learning experience for both sides on this issue, hopefully one that would show that taking action to protect the climate is both practical and affordable.

Of course, cap-and-trade is not the only broad policy that we need to think about. We also need a climate-conscious energy policy for the United States. In Great Britain, the government has developed an energy blueprint for the next 50 years that makes climate change a key driver of that country’s energy policy, along with price and security of supply. The United States would be wise to follow suit.

I have tried in these remarks to talk about what we need to do here at home in order to approach the climate issue in a serious way. We need a robust, climate-friendly energy policy. Incentives and requirements for clean technologies. A cap-and-trade program to reduce emissions at the lowest cost. But it is important to remember that we need to engage on this issue at the international level too. Climate change is a global problem. Even if we were to get dead serious about reducing our emissions tomorrow, we won’t get where we need to be unless all countries become a part of the solution.

In December, as many of you know, delegates from the United States joined representatives of other nations at a climate meeting in Buenos Aires. The ostensible purpose of the meeting was to tie up any loose ends that remained before the Kyoto Protocol goes into force in February. The Protocol, of course, is the international agreement that commits all of its signatory countries to specific targets for reducing their greenhouse gas emissions before 2012. The Buenos Aires meeting also, it was assumed, would begin to lay the groundwork for the next steps in the international climate effort – in other words, what happens after 2012?

The only problem with the latter assumption is that the United States, which is not even a party to the Protocol, was opposed to any discussion of the future. In a truly Orwellian quote, the lead U.S. negotiator at the meeting was heard to say, “We need to absorb and analyze lessons learned before committing to new actions.” End quote. New actions? I didn’t know that we had committed to any old actions. And it is hard to learn any lessons when you’re doing next to nothing.

We might as well have had Michael Crichton as the head of our negotiating team. At least he would have made it more interesting.

In any case, the events in Buenos Aires underscore how far the U.S. has strayed since 1992, when President George H.W. Bush signed the United Nations Framework Convention on Climate Change. This is the treaty where the nations of the world acknowledged that climate change was a problem and pledged to act – voluntarily, I might add – to reduce their emissions. Even during the Clinton administration, despite signing the Kyoto Protocol, we clearly were not willing to own up to our global responsibility on this issue.

Climate change requires that we act at both the international and the national levels, and my goal today has been to give you some ideas and examples of the kinds of things we need to do. Now, at this point I could wrap up by remarks by comparing what we need to do with what is actually happening. And, I would start by talking about the relatively low level of investment in this issue on the part of the federal government. I would then have to mention the Administration’s goal of growing our emissions. And I would come back again to our reluctance to enter the debate on how we might move forward on this issue globally. But I don’t want to leave you depressed, particularly given the fact that you have had such frightening weather these last few weeks.

Instead, I will leave you with a look on the bright side of this issue. Because, despite everything else, we have seen a few signs of progress in the past year. One of these, of course, is the fact that the Kyoto Protocol is ready to enter into force in February – no matter what you want to say about it, this is an historic achievement. And, in a related development that I already mentioned, we have seen the launch of the EU trading system for carbon dioxide – it is another historic achievement and, hopefully, the first of many such trading systems around the world.

Next, I want to pay tribute to British Prime Minister Tony Blair, who has spent a good part of the past year touting climate change as one of two key issues he intends to work on as president of both the EU and G-8 group of industrialized nations.

Yet another thing to celebrate is the work of many U.S. states to get a handle on this issue, even despite the lack of action in Washington. I mentioned the work of the Northeastern governors on cap-and-trade. And I also talked about what’s happening here in California with regard to motor vehicle emissions. And there are many more stories from the states about people stepping up to their responsibility to act. U.S. states are a large source of greenhouse gas emissions – California’s exceed those of Brazil. And, while national policies are essential, we also need the states to do their part.

Last but not least, I want to celebrate what is happening in many corners of the business community to address this problem. Many of the companies we work with at the Pew Center are adopting voluntary targets for reducing their greenhouse gas emissions. And, not only that, they are taking action to meet their targets by investing in new technologies, increasing efficiency, and developing energy-saving products, clean fuels, biomass energy, and more.

In closing, let me say that the forecast for the future needn’t be gloomy. A lot is happening to address the climate change problem. But we need to do a lot more. And I encourage all of you to do what’s needed to make sure your state remains a leader in addressing this issue in the years ahead. We need to show that solutions are within our grasp, that smart, forward-thinking policies can drive the development and deployment of new, low-carbon technologies, and that progress is possible.

Climate change is the most important global environmental challenge we will face in the years ahead. Don’t let anyone tell you it’s fiction. You know better. And it is going to be people like you who come up with the solutions we need.

Reports Offer Options, Insights on Advancing the International Climate Effort

Washington, D.C. – With the Kyoto Protocol about to enter into force, two new reports by the Pew Center on Global Climate Change examine key issues facing governments and stakeholders as they begin weighing options for strengthening the international climate change effort beyond 2012.

The two reports – Climate Data: Insights and Observations; and International Climate Efforts Beyond 2012: A Survey of Approaches – were prepared as background material for the Climate Dialogue at Pocantico, an ongoing series of discussions among senior policymakers and stakeholders from 15 countries on options for next steps in the climate effort. The reports were released today at COP 10 in Buenos Aires.

“Kyoto is a start, but ahead lies a far greater challenge: engaging all the world’s major emitters in a long-term approach that fairly and effectively mobilizes the technology and resources needed to protect the global climate,” said Pew Center President Eileen Claussen. “These new reports lay out a broad array of options for moving the international effort forward, and offer keen insights on the very real challenges we face in the coming negotiations.”

Climate Data: Insights and Observations, by Kevin Baumert, Jonathan Pershing, Timothy Herzog and Matthew Markoff of the World Resources Institute (WRI), draws policy-relevant observations from a comprehensive database of emissions, energy, economic and other data assembled by WRI and called the Climate Analysis Indicators Tool.

The report focuses largely on the 25 countries with the largest greenhouse gas (GHG) emissions. Among its findings:

A relatively small number of countries produce a large majority of global GHG emissions, and most also rank among the world’s most populous countries and those with the largest economies. The group includes almost an equal number of developed and developing countries, as well as economies in transition.

Per capita emissions and per capita income vary widely among the major emitters, a group that includes some the world’s richest and poorest countries.

The group of top emitters varies little whether counting only carbon dioxide (CO2) emissions from fossil fuel combustion, or CO2 from land use change as well, or other greenhouse gases; or whether looking at present, cumulative or projected emissions.

The report also looks at variations in carbon intensity, vulnerability to adverse climate impacts, and capacity to address climate change.

International Climate Efforts Beyond 2012: A Survey of Approaches, by Daniel Bodansky of the University of Georgia and Sophie Chou and Christie Jorge-Tresolini of the Pew Center, surveys and synthesizes more than 40 proposed approaches for strengthening international climate efforts beyond 2012.

In addition to brief summaries of each proposal, the report provides an overview of key issues in the design and negotiation of future international efforts, and describes how the various proposals seek to address them. The issues include: the form and forum of negotiations; the time frame of a future agreement; the type and stringency of climate commitments; burden-sharing; and adaptation. The report also outlines criteria for assessing different options from a policy and a political perspective.

“It’s clear from this report that lots of smart people are thinking creatively about the best ways to strengthen the international climate effort,” said Claussen. “Working with policymakers and stakeholders through our Climate Dialogue at Pocantico, the Pew Center is committed to advancing this critical debate and arriving at fair, practical solutions.”

The Climate Dialogue at Pocantico provides an off-line opportunity for 25 senior policymakers and stakeholders to consider specific options for next steps in the international effort. Members, who participate in their personal capacities, include policymakers from Australia, Brazil, Canada, China, Germany, Japan, Mexico, Tuvalu, the United Kingdom, and the United States; NGO representatives from India, Switzerland and the United States; and senior executives from Alcoa, BP, DuPont, Eskom, Exelon, Rio Tinto, and Toyota.

The first and second sessions of the dialogue were held in July and October 2004. A third session will be held in February 2005, and a final session in May. The objective is a set of post-2012 options to be recommended for consideration by the broader policy community.

The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States’ largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is an independent, nonprofit, and non-partisan organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.